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Exhibit 10.1
Amended and Restated Employment Agreement
This Amended and Restated Employment Agreement (this
“Agreement”) is made among Vineyard National Bancorp
(“Company”), Vineyard Bank, National Association
(“Bank”) and Glen C. Terry
(“Executive”). In order to create an
enforceable agreement for employment of Executive, the parties
agree as follows:
1. Employment and Duties. Executive shall be employed
as the President and Chief Executive Officer of both Bank and
Company throughout the Term (as defined below). Executive shall
render executive and management services of the type customarily
provided by persons employed in similar capacities in the community
bank industry and shall have all other powers and duties prescribed
by Bank’s and Company’s respective governing
instruments or Board of Directors. Executive shall
devote his reasonable best efforts and a majority of his business
time to the performance of his duties hereunder and the advancement
of the business and affairs of Bank and
Company. Executive shall observe and comply with the
policies and rules of Bank and Company unless such compliance is
inconsistent with the terms of this Agreement.
2. Location and Facilities. Executive will operate
from Bank’s and Company’s principal administrative
offices or such other sites as Bank’s or Company’s
Board of Directors may reasonably request. Bank and
Company shall provide working facilities and staff customary for
Executive’s position and as are necessary to perform
Executive’s duties.
3. Term. Executive’s employment shall
initially be for a one-year term commencing on September 12, 2008
(the “Start Date”) and shall renew for additional
one-year periods thereafter on each anniversary of the Start Date
unless at least thirty (30) days prior notice is provided by any
party that it does not wish to renew. Notwithstanding
anything to the contrary in this Agreement, any party may terminate
Executive’s employment at any time in accordance with this
Agreement or applicable law. The period of such initial
term and any renewal period(s) through the date of termination of
Executive’s employment shall be referred to as the
“Term.”
4. Base Compensation.
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a.
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Base Salary. During the Term, Executive shall receive
a base salary at an annualized rate of Three Hundred Sixty Thousand
dollars ($360,000), less any deductions and withholding required by
law and less any Executive-authorized payroll deductions, payable
in accordance with regular payroll
practices. Executive’s base annualized salary rate
may be adjusted upward annually without further modification of
this Agreement upon approval of the Boards of Directors of both
Bank and Company.
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b.
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Responsibility for Payments Generally. Responsibility
for all cash payments due Executive under this Agreement (such as
base salary, the cash portion of any Annual Bonus pursuant to
Section 7, and any Severance Payment pursuant to Section 15) shall
be apportioned between Bank and Company, which apportionment shall
be determined by Company in its discretion from time to time in
accordance with applicable accounting and regulatory
requirements. Upon any Change of Control, the
responsibility for all cash payments due Executive under this
Agreement shall be apportioned 100% to, and shall be the sole
responsibility of, the Bank or its successor.
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5. Benefit Plans. During the Term, Executive shall
be entitled to participate in such welfare benefit, pension
benefit, ESOP or other stock compensation, and other benefit plans
or programs maintained by Bank or Company for which Executive is
eligible in accordance with Bank or Company policy, as the case may
be, and subject to the terms and conditions of such benefits, plans
and programs. Nothing in this Agreement shall affect
Bank’s or Company’s right to change insurance carriers
and to adopt, amend, terminate or modify such benefits, plans and
programs at any time. 6. Vacation and Other
Leave. During the Term, Executive shall be entitled to
vacation, paid time off, sick leave and other paid or unpaid leave
benefits in accordance with Bank and Company policies for senior
executives or as otherwise approved by the Boards of Directors of
both Bank and Company.
7. Bonus Compensation. In addition to base salary,
Executive shall be eligible during the Term beginning in calendar
year 2009 for an annual bonus at a target of eighty percent (80%)
of Executive’s annualized base salary rate (the “Annual
Bonus”). Executive must be employed on December 31
of a calendar year to be eligible for an Annual Bonus for that
calendar year, except as otherwise provided in this
Agreement. Whether to pay an Annual Bonus and the amount
of any Annual Bonus if paid shall be determined in the discretion
of Bank’s and Company’s respective Board of Directors
(or any committee(s) thereof) based on the attainment of reasonable
performance-based criteria established by them so long as (a)
Executive’s target Annual Bonus is eighty percent of his
annualized base salary rate, and (b) the criteria are established
to and do achieve qualified performance-based compensation status
under Internal Revenue Code section 162(m), 26 U.S.C. §
162(m). The performance-based criteria may include, but
are not limited to, management of Bank’s balance sheet and
product pricing, growth in financial products offered by Bank,
adherence to internal controls, management of credit risk, internal
and external audit results, customer service quality, “back
office” support quality, maintenance of appropriate operating
policies and procedures, efficient integration of acquired
companies, and capital management policies. The specific
criteria for each calendar year shall be set by agreement between
Executive and both Bank’s and Company’s Boards of
Directors. A portion of any Annual Bonus awarded will be
in the form of stock option grants, as described in Section 8(b)
below. Any Annual Bonus awarded shall be paid (or
granted in the case of any stock options grants) no later than
March 15 of the year following the year for which it was awarded.
8. Stock Option Grants. Company shall grant
the following stock options to Executive as provided below and when
legally permissible under one or more plans maintained by
Company:
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a.
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Initial Grant. As soon as possible after the
Effective Date, the parties anticipate closing of a proposed
capital raise involving renegotiation and settlement of various
Bank debts, issuance of convertible senior secured notes, and
issuance of additional shares of Company common stock (the
“Capital Raise”). Company shall grant
Executive an option to purchase shares of Company common stock with
an aggregate option exercise price equal to One Hundred Eighty
Thousand dollars ($180,000), as promptly as practicable following
close of the Capital Raise, with an option exercise price equal to
the fair market value of the Company’s common stock at the
time of grant. Executive recognizes that such grants
will be made under a new stock option plan to be adopted by the
Company, which plan is subject to shareholder approval.
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b.
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Annual Bonus Grants. Sixty percent (60%) of any
Annual Bonus awarded pursuant to Section 7 above will be paid in
the form of options to purchase shares of Company common stock with
an aggregate option exercise price equal to sixty percent (60%) of
such Annual Bonus, granted as soon as practicable following the
date such Annual Bonus is granted. The option exercise
price shall be equal to the shares’ fair market value at the
time of grant.
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The parties agree that any such options awarded shall be for a term
of ten years and shall vest in installments of one-third per year
over a period of three years. The parties also agree
that, to the maximum extent permitted by law, each option will
qualify as an “incentive stock option” within the
meaning of Internal Revenue Code section 422, 26 U.S.C. §
422. Bank and Company shall take all steps
necessary to ensure compliance with Section 422. This
Section 8 shall not prohibit any other grants that Bank or Company
may, in their discretion, make to Executive during the Term.
9. Vesting of Options Upon Change of Control. The
option agreements covering any Company stock options granted to
Executive pursuant to Section 8 shall provide that all options will
vest immediately upon any Change of Control. "Change of
Control" shall mean either: (a) a consolidation or merger of
Company with or into any other corporation or other entity or other
corporate reorganization, in which the holders of equity interests
of Company immediately prior to such consolidation, merger or
reorganization own equity interests of the entity surviving such
merger, consolidation or reorganization representing less than
fifty percent (50%) of the combined voting power of the outstanding
securities of such entity immediately after such consolidation,
merger or reorganization, or (b) a sale of all or substantially all
of the assets of Company (including a sale of the Bank) to an
entity or person that is not an affiliate of
Company. The option agreements shall also provide for
vesting of all options upon termination of Executive’s
employment without Cause (as defined below) or upon
Executive’s resignation from employment for Good Reason (as
defined below). Upon termination of Executive’s
employment for any other reason, vesting of any stock options shall
immediately cease, and any unvested options shall immediately be
forfeited. 10. Expenses. Bank or Company
shall reimburse Executive for reasonable out-of-pocket expenses
incurred by him during the Term in the discharge of his duties
under this Agreement in accordance with Bank and Company
policy. All reimbursable expenses shall be documented in
reasonable detail and submitted in a format consistent with
Bank’s or Company’s expense reporting policies.
11. Automobile. During the Term, Bank or Company
shall pay Executive an automobile allowance of One Thousand
Two-Hundred Fifty dollars ($1,250) per month, less any deductions
and withholding required by law. Executive shall be
responsible for insurance, maintenance, and any other costs
associated with any automobile operated by him, and he shall not be
eligible for any further reimbursement or allowance for mileage,
gasoline, or other automobile-related expenses.
12. Additional Reimbursements. Bank or
Company shall also reimburse Executive for the following expenses
incurred by him during the Term:
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a.
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Country club membership, at full equity membership level, and
monthly dues (including minimum mandatory periodic expenditures) up
to One Thousand dollars ($1,000) per month; provided, that (i)
Executive’s country club membership fees shall not be
reimbursed hereunder unless at least 75% of the amounts paid for
membership (other than monthly dues) are fully refundable to
Executive by such country club upon the termination of
Executive’s membership at such country club, with Executive
having provided reasonably satisfactory evidence to Bank and
Company of the refundable nature of such country club membership
fees, (ii) reimbursement for country club membership (other than
monthly dues) shall not exceed One Hundred Thousand dollars
($100,000), and (iii) upon the termination of Executive’s
membership with any country club for which Executive has received
reimbursement hereunder or the termination of Executive’s
employment with Bank and Company, Executive shall promptly remit to
Bank and Company all amounts refunded to him (or in the case of a
termination of employment
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